MAITLAND, Fla., Jan. 14, 2010 (GLOBE NEWSWIRE) -- Workstream Inc. (OTCBB:WSTM), a leading provider of on-demand compensation, performance and talent management software that helps companies manage the entire employee lifecycle, today announced financial results for the second quarter ended November 30, 2009.
Highlights of the Second Quarter Include:
-- Increase of $818,000, or 19%, in revenues to $5,030,000 during the
second quarter of fiscal 2010 in comparison to $4,212,000 during
the first quarter of fiscal 2010;
-- Operating income of $139,000 for the three months ended November
30, 2009;
-- Second consecutive quarter of positive EBITDA, as adjusted, of
$475,000 during the second quarter of fiscal 2010 compared to
$50,000 for the first quarter of fiscal 2010;
-- Reduction in net loss to ($341,000) from ($1,350,000) and to
($701,000) from ($3,401,000) as well as a reduction in net loss per
share (basic and diluted) to ($0.01) from ($0.02) and to ($0.01)
from ($0.06) for the three and six months ended November 30, 2009,
respectively, in comparison to the same periods of prior year;
-- Subsequent to quarter end, closing of note exchange and
restructuring of senior secured notes; and,
-- Changes in Workstream's executive management team, as follows:
- Executive Chairman Mr. Michael Mullarkey assuming the duties of
President and Chief Executive Officer;
- Mr. Andrew Hinchliff joining as Senior Vice President of North
American Sales; and,
- Mr. Jerome P. Kelliher joining as Chief Financial Officer.
"The second quarter results and overall operational improvements reflect Workstream's determined march towards stability and profitability," said President and Chief Executive Officer, Michael Mullarkey. "With the restructuring of the notes and new members of management in place, the Company can implement a new, more targeted approach during the second half of fiscal 2010 to grow revenues organically and better align our financial position with our operational requirements."
Workstream delivered the following results for the three and six months ended November 30, 2009:
Total revenues were $5,030,000 and $9,242,000 for the three and six months ended November 30, 2009, respectively, compared to $5,144,000 and $10,697,000 for the three and six months ended November 30, 2008, respectively.
Total operating expenses decrease to $3,160,000 and $6,349,000 for the three and six months ended November 30, 2009, respectively, from $4,612,000 and $10,623,000 for the three and six months ended November 30, 2008, respectively.
Operating income / (loss) were $139,000 and ($129,000) for the three and six months ended November 30, 2009, respectively, compared to ($967,000) and ($3,028,000) for the three and six months ended November 30, 2008, respectively.
Net loss was ($341,000) and ($701,000) for the three and six months ended November 30, 2009, respectively, compared to ($1,350,000) and ($3,401,000) for the three and six months ended November 30, 2008, respectively.
Net loss per share (basic and diluted) were ($0.01) and ($0.01) for the three and six months ended November 30, 2009, respectively, compared to ($0.02) and ($0.06) for the three and six months ended November 30, 2008, respectively.
EBITDA, as adjusted, was $475,000 and $524,000 for the three and six months ended November 30, 2009, respectively, compared to ($482,000) and ($1,968,000) for the three and six months ended November 30, 2008, respectively.
Total assets increased to $23,305,000 at November 30, 2009 from $23,076,000 at May 31, 2009.
Working capital, which represents current assets less current liabilities, was ($3.5) million at November 30, 2009 compared to ($24.2) million at May 31, 2009.
Cash flows used in operating activities decreased to ($26,000) for the six months ended November 30, 2009 compared to ($2,396,000) for the six months ended November 30, 2008. Further, the overall net decrease in cash and cash equivalents was reduced to ($450,000) for the six months ended November 30, 2009 compared to ($2,552,000) for the six months ended November 30, 2008.
Conference Call
Management will host a conference call at 9:00 a.m. EST on Friday, January 15, 2010 to discuss Workstream's second quarter fiscal 2010 operating results. Interested participants may listen to the call by dialing toll free 877-627-6582 (or 719-325-4834 for international callers) and referencing code 5408129. For those unable to participate in the live call, a replay will be available after 12 noon EST on the same day, until midnight EST January 29, 2010, by calling 888-203-1112 utilizing access code 5408129.
About Workstream Inc.
Workstream provides enterprise workforce management solutions and services that help companies manage the entire employee lifecycle -- from recruitment to retirement. Workstream's TalentCenter provides a unified view of all Workstream products and services including Recruitment, Benefits, Performance, Compensation, Rewards, Development and Transition. Access to TalentCenter is offered on a monthly subscription basis under an on-demand software delivery model to help companies build high performing workforces, while controlling costs. Workstream services customers with offices across North America. Workstream services such customers as Kaiser, Marshfield Clinic, Chevron, The Gap, and Nordstrom and several government agencies. For more information visit www.workstreaminc.com or call toll free 866-953-8800.
The Workstream, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6175
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Workstream's management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: failure to negotiate the final terms of definitive agreements giving effect to the proposed note restructuring; in the event a restructuring of our indebtedness is not consummated, if an event of default should occur and be continuing with respect to such indebtedness; inability to grow our client base and revenue because of the number of competitors and the variety of sources of competition we face; client attrition; inability to offer services that are superior and cost effective when compared to the services being offered by our competitors; inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to enter into successful strategic relationships and other risks detailed from time to time in filings with the Securities and Exchange Commission.
WORKSTREAM INC.
CONDENSED CONSOLIDATED CONSOLIDATED BALANCE SHEETS
As of November 30, 2009 and May 31, 2009
(Unaudited)
November 30, May 31,
2009 2009
------------ ------------
ASSETS: (Unaudited)
Current assets:
Cash and cash equivalents $ 1,193,634 $ 1,643,768
Accounts receivable, net of
allowances of $1,133,553 and
$928,430 at November 30, 2009
and May 31, 2009, respectively 3,581,908 2,746,360
Prepaid expenses and other
assets 139,632 146,609
------------ ------------
Total current assets 4,915,174 4,536,737
Equipment, net 493,365 757,050
Other assets 166,778 30,990
Acquired intangible assets, net -- 21,500
Goodwill 17,729,448 17,729,448
------------ ------------
TOTAL ASSETS $ 23,304,765 $ 23,075,725
============ ============
LIABILITIES AND SHAREHOLDERS'
DEFICIT:
Current liabilities:
Accounts payable $ 1,129,681 $ 1,856,892
Accrued liabilities 3,580,850 2,924,145
Accrued compensation 675,954 526,935
Current portion of senior
secured notes payable and
accrued interest 276,250 20,158,044
Embedded put derivative -- 493,693
Current portion of long-term
obligations 220,813 199,516
Deferred revenue 2,519,216 2,591,328
------------ ------------
Total current liabilities 8,402,764 28,750,553
Senior secured notes payable and
accrued interest, less current
portion 21,274,823 --
Long-term obligations, less
current portion 220,716 124,594
Deferred revenue - long term 146,156 --
Common stock warrant liability 582,400 --
------------ ------------
Total liabilities 30,626,859 28,875,147
Commitments and Contingencies
SHAREHOLDERS' DEFICIT:
Preferred shares, no par value -- --
Common shares, no par value 113,668,376 113,668,376
Additional paid-in capital 18,001,063 18,269,589
Accumulated deficit (138,114,927) (136,876,313)
Accumulated other comprehensive
loss (876,606) (861,074)
------------ ------------
Total shareholders' deficit (7,322,094) (5,799,422)
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 23,304,765 $ 23,075,725
============ ============
WORKSTREAM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended November 30, 2009 and 2008
(Unaudited)
Three Months Ended Six Months Ended
November 30 November 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenues:
Software $ 1,739,128 $ 1,838,082 $ 3,345,455 $ 3,631,979
Professional
services 273,567 509,169 507,905 1,231,140
Rewards 2,096,257 1,435,089 3,520,071 2,954,004
Career networks 921,167 1,361,983 1,868,433 2,880,086
----------- ----------- ----------- -----------
Revenues, net 5,030,119 5,144,323 9,241,864 10,697,209
Cost of revenues 1,732,050 1,499,342 3,021,738 3,101,812
----------- ----------- ----------- -----------
Gross profit 3,298,069 3,644,981 6,220,126 7,595,397
Operating
expenses:
Selling and
marketing 545,513 1,128,676 1,002,181 2,431,283
General and
administrative 1,971,921 2,052,077 3,993,777 4,977,563
Research and
development 341,148 985,159 770,287 2,287,260
Amortization and
depreciation 300,924 446,092 582,701 926,867
----------- ----------- ----------- -----------
Total operating
expenses 3,159,506 4,612,004 6,348,946 10,622,973
----------- ----------- ----------- -----------
Operating
income / (loss) 138,563 (967,023) (128,820) (3,027,576)
Other income /
(expense):
Interest income
and expense, net (887,502) (351,025) (1,401,577) (347,435)
Change in fair
value of
warrants and
derivative 364,226 -- 787,693 --
Other income and
expense, net 43,620 (47,297) 42,018 (87,721)
----------- ----------- ----------- -----------
Other expense,
net (479,656) (398,322) (571,866) (435,156)
----------- ----------- ----------- -----------
Loss before income
tax benefits /
(expense) (341,093) (1,365,345) (700,686) (3,462,732)
Income tax
expense (39) 15,725 (328) 61,530
----------- ----------- ----------- -----------
NET LOSS $ (341,132) $(1,349,620) $ (701,014) $(3,401,202)
=========== =========== =========== ===========
Loss per share -
basic and
diluted $ (0.01) $ (0.02) $ (0.01) $ (0.06)
=========== =========== =========== ===========
Weighted average
number of common
shares
outstanding
- basic and
diluted 56,997,415 55,120,140 56,995,352 53,766,928
=========== =========== =========== ===========
WORKSTREAM INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended November 30, 2009 and 2008
(Unaudited)
Six Months Ended
November 30,
--------------------------
2009 2008
------------ ------------
Cash flows used in operating activities:
Net loss $ (701,014) $(3,401,202)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation 582,701 926,867
Leasehold inducement amortization 4,778 (30,497)
Provision for bad debt 198,642 465,999
Stock related compensation 70,274 132,702
Change in fair value of warrants and
derivative (787,693) --
Net change in components of working
capital:
Accounts receivable (1,034,189) (314,412)
Prepaid expenses and other assets 6,977 187,819
Accounts payable (639,262) (723,545)
Accrued liabilities 2,049,734 506,520
Accrued compensation 149,019 (318,951)
Deferred revenue 74,043 173,093
------------ ------------
Net cash used in operating
activities (25,990) (2,395,607)
Cash flows provided by (used in) investing
activities:
Purchase of equipment (106,761) (1,922)
Proceeds from sale of short-term
investments -- 9,091
------------ ------------
Net cash provided by (used in)
investing activities (106,761) 7,169
Cash flows provided by (used in) financing
activities:
Payment of costs associated with re-
financing of senior secured notes (135,788) --
Repayment of long-term obligations (164,573) (232,748)
------------ ------------
Net cash used in financing
activities (300,361) (232,748)
Effect of exchange rate changes on cash and
cash equivalents (17,022) 69,410
------------ ------------
Net decrease in cash and cash equivalents (450,134) (2,551,776)
Cash and cash equivalents - beginning of
period 1,643,768 3,435,337
------------ ------------
Cash and cash equivalents - end of period $ 1,193,634 $ 883,561
============ ============
Supplemental schedule of non-cash investing
and financing activities:
Equipment acquired under capital leases $ 191,298 $ --
============ ============
Cumulative effect of change in accounting
principle for warrant classification $ 876,400 $ --
============ ============
Exchange of warrant liability
for senior secured notes payable $ -- $19,000,000
============ ============
Non-cash issuance of common stock in
connection with the settlement of class
action lawsuits $ -- $ 600,000
============ ============
WORKSTREAM INC.
EBITDA (AS ADJUSTED)
For the Three and Six Months Ended November 30, 2009 and 2008
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net loss, as
reported under
US GAAP $ (341,132) $(1,349,620) $ (701,014) $(3,401,202)
Effects of
certain
transactions:
Interest income
and expense,
net 887,502 351,025 1,401,577 347,435
Income tax
expense 39 (15,725) 328 (61,530)
Amortization
and
depreciation 300,924 446,092 582,701 926,867
Stock related
compensation 35,119 39,015 70,274 132,702
Change in fair
value of
warrants and
derivative (364,226) -- (787,693) --
Other income
and expense,
net (43,620) 47,297 (42,018) 87,721
----------- ----------- ----------- -----------
EBITDA, as
adjusted $ 474,606 $ (481,916) $ 524,155 $(1,968,007)
=========== =========== =========== ===========
EBITDA is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA provides useful information to investors as it excludes transactions not related to the core cash operating business activities including non-cash transactions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. All companies do not calculate EBITDA in the same manner, and EBITDA as presented by Workstream may not be comparable to EBITDA presented by other companies. Workstream defines EBITDA as earnings or loss from continuing operations before interest, taxes, depreciation and amortization, other income and expense, including effects of foreign currency gains or losses, non-cash stock related compensation, gain or loss on asset disposals or impairment, merger and acquisition costs, and non-recurring goodwill impairment, if applicable.